A CPA who is engaged to prepare an income tax return has a duty to prepare it in such a manner that the tax is: a. The legal minimum. b. Computed in conformity with generally accepted accounting principles. c. Supported by the client’s audited financial statements. d. Not subject to change upon audit

A CPA who is engaged to prepare an
income tax return has a duty to prepare it
in such a manner that the tax is:
a. The legal minimum.
b. Computed in conformity with generally
accepted accounting principles.
c. Supported by the client’s audited
financial statements.
d. Not subject to change upon audit
by

1 Answer

Answer :

The legal minimum
by

Related questions

An attestation engagement is one in which a CPA is engaged to: a. Assemble prospective financial statements based on the assumptions of the entity's management without expressing any Testify as an expert witness in accounting, auditing or tax matters, given certain stipulated facts. b. assurance. c. Issue a written communication expressing a conclusion about the reliability of a written assertion that is the responsibility of another party. d. Provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed.

Description : An attestation engagement is one in which a CPA is engaged to: a. Assemble prospective financial statements based on the assumptions of the entity's management without expressing any Testify as an expert ... or prepare a tax return based on financial information the CPA has not audited or reviewed.

Last Answer : Issue a written communication expressing a conclusion about the reliability of a written assertion that is the responsibility of another party

Which of the following types of audits is performed to determine whether an entity's financial statements are fairly stated in conformity with generally accepted accounting principles? a. Operational audit b. Compliance audit c. Performance audit d. Financial statement audit

Description : Which of the following types of audits is performed to determine whether an entity's financial statements are fairly stated in conformity with generally accepted accounting principles? a. Operational audit b. Compliance audit c. Performance audit d. Financial statement audit

Last Answer : Financial statement audit

The auditor's best defense when material misstatements in the financial statements are not uncovered in the audit is that a. The financial statements are client's responsibility. b. The audit was conducted in accordance with PSAs c. Client is guilty of contributory negligence. d. The audit was conducted in accordance with generally accepted accounting principles.

Description : The auditor's best defense when material misstatements in the financial statements are not uncovered in the audit is that a. The financial statements are client's responsibility. b. ... contributory negligence. d. The audit was conducted in accordance with generally accepted accounting principles.

Last Answer : The audit was conducted in accordance with PSAs

A CPA is criminally liable if he a. Refuses to turn over the schedules or working papers prepared by the client staff to the client. b. Performs an audit in a negligent manner. c. Intentionally allows an omission of a material fact required to be stated in a financial statement. d. Was not able to submit the audited financial statements on time

Description : A CPA is criminally liable if he a. Refuses to turn over the schedules or working papers prepared by the client staff to the client. b. Performs an audit in a negligent manner. c. Intentionally ... be stated in a financial statement. d. Was not able to submit the audited financial statements on time

Last Answer : Intentionally allows an omission of a material fact required to be stated in a financial statement

A CPA is criminally liable if he a. Refuses to turn over the schedules or working papers prepared by the client staff to the client. b. Performs an audit in a negligent manner. c. Intentionally allows an omission of a material fact required to be stated in a financial statement. d. Was not able to submit the audited financial statements on time

Description : A CPA is criminally liable if he a. Refuses to turn over the schedules or working papers prepared by the client staff to the client. b. Performs an audit in a negligent manner. c. Intentionally ... be stated in a financial statement. d. Was not able to submit the audited financial statements on time

Last Answer : Intentionally allows an omission of a material fact required to be stated in a financial statement.

Which of the following is an incorrect statement relating to the theoretical framework of auditing? a. Effective internal control structure reduces the probability of fraud or irregularities in an organization. b. Application of generally accepted accounting principles results in a fair presentation of financial statements. c. When examining financial data foropinion thereon, the auditor actsexclusively in the capacity of an auditor.d. In collecting evidence, auditorsshould maintain an attitude of trustabout their clients' assertions. the purpose of expressing an independent

Description : Which of the following is an incorrect statement relating to the theoretical framework of auditing? a. Effective internal control structure reduces the probability of fraud or irregularities in ... collecting evidence, auditors should maintain an attitude of trust about their clients' assertions.

Last Answer : In collecting evidence, auditors should maintain an attitude of trust about their clients' assertions.

An engagement to apply agreed-upon procedure engagement may be accepted, provided a. The CPA has audited the financial statements of the client. b. The CPA is independent with respect to the client. c. The distribution of the report will be limited only to specified parties involved. d. The adequacy of the procedures to be performed will be determined by the CPA.

Description : An engagement to apply agreed-upon procedure engagement may be accepted, provided a. The CPA has audited the financial statements of the client. b. The CPA is independent with respect to the client. ... involved. d. The adequacy of the procedures to be performed will be determined by the CPA.

Last Answer : The distribution of the report will be limited only to specified parties involved.

Generally accepted accounting principles (GAAP) are distinguished from generally accepted auditing standards (GAAS) in that: a. GAAP are the principles auditors follow when conducting an audit, while GAAS are the standards for presentation of financial statements and underlying transactions. b. GAAP are the principles for presentation of financial statements and underlying transactions, while GAAS are the standards that the auditors should follow when conducting an audit. c. When GAAP are violated, sufficiently strong GAAS may make up for most GAAP deficiencies. d. GAAP are promulgated by the SEC, while GAAS are promulgated by the PFRC

Description : Generally accepted accounting principles (GAAP) are distinguished from generally accepted auditing standards (GAAS) in that: a. GAAP are the principles auditors follow when conducting an audit, while GAAS ... deficiencies. d. GAAP are promulgated by the SEC, while GAAS are promulgated by the PFRC

Last Answer : GAAP are the principles for presentation of financial statements and underlying transactions, while GAAS are the standards that the auditors should follow when conducting an audit.

A typical objective of an operational audit is to determine whether an entity's a. Internal control structure is adequately operating as designed b. Operational information is in accordance with generally accepted accounting principles. c. Specific operating units are functioning efficiently and effectively d. Financial statements present fairly the results of operations

Description : A typical objective of an operational audit is to determine whether an entity's a. Internal control structure is adequately operating as designed b. Operational information is in ... are functioning efficiently and effectively d. Financial statements present fairly the results of operations

Last Answer : Specific operating units are functioning efficiently and effectively

A operational audit is primarily oriented toward a. Future improvements to accomplish management’s goals. b. Past protection provided by existing internal control. c. Operational information is in accordance with generally accepted accounting principles. d. Financial statements are fairly presented.

Description : A operational audit is primarily oriented toward a. Future improvements to accomplish management’s goals. b. Past protection provided by existing internal control. c. Operational information is in accordance with generally accepted accounting principles. d. Financial statements are fairly presented.

Last Answer : Future improvements to accomplish management’s goals.

A CPA firm is considered independent when it performs which of the following services for a publicly traded audit client? a. Serving as a member of the client’s board of directors. b. Accounting information system design and implementation. c. Tax return preparation as approved by the board of directors. d. Determining which accounting policies will be adopted by the client

Description : A CPA firm is considered independent when it performs which of the following services for a publicly traded audit client? a. Serving as a member of the client's board of directors. b. ... approved by the board of directors. d. Determining which accounting policies will be adopted by the client

Last Answer : Tax return preparation as approved by the board of directors.

A CPA firm is considered independent when it performs which of the following services for a publicly traded audit client? a. Serving as a member of the client’s board of directors. b. Accounting information system design and implementation. c. Tax return preparation as approved by the board of directors. d. Determining which accounting policies will be adopted by the client

Description : A CPA firm is considered independent when it performs which of the following services for a publicly traded audit client? a. Serving as a member of the client's board of directors. b. ... approved by the board of directors. d. Determining which accounting policies will be adopted by the client

Last Answer : Tax return preparation as approved by the board of directors.

A CPA firm is considered independent when it performs which of the following services for a publicly-traded audit client? a. Serving as a member of the client's board of directors. b. Determining which accounting policies will be adopted by the client. c. Accounting information system design and implementation. d. Tax return preparation as approved by the board of directors.

Description : A CPA firm is considered independent when it performs which of the following services for a publicly-traded audit client? a. Serving as a member of the client's board of directors. b. ... information system design and implementation. d. Tax return preparation as approved by the board of directors.

Last Answer : Tax return preparation as approved by the board of directors.

The term "accountant" has been used by Auditing and Assurance Standards Council to refer to a CPA in public practice who is engaged to: a. Audit financial statements. b. Review financial statements. c. Apply agreed-upon procedures. d. Compile financial statements

Description : The term "accountant" has been used by Auditing and Assurance Standards Council to refer to a CPA in public practice who is engaged to: a. Audit financial statements. b. Review financial statements. c. Apply agreed-upon procedures. d. Compile financial statements

Last Answer : Compile financial statements

The term "accountant" has been used by Auditing and Assurance Standards Council to refer to a CPA in public practice who is engaged to: a. Audit financial statements. b. Review financial statements. c. Apply agreed-upon procedures. d. Compile financial statements.

Description : The term "accountant" has been used by Auditing and Assurance Standards Council to refer to a CPA in public practice who is engaged to: a. Audit financial statements. b. Review financial statements. c. Apply agreed-upon procedures. d. Compile financial statements.

Last Answer : Compile financial statements.

A CPA is conducting the first audit of a client’s financial statements. The CPA hopes to reduce the audit work by consulting with the predecessor auditor and reviewing the predecessor's working papers. This procedure is a. Acceptable if the CPA refers in the audit report to reliance upon the predecessor auditor's work. b. Required if the CPA is to render an unqualified opinion. c. Unacceptable because the CPA should bring an independent viewpoint to a new engagement. d. Acceptable if the client and the predecessor auditor agree to it.

Description : A CPA is conducting the first audit of a client's financial statements. The CPA hopes to reduce the audit work by consulting with the predecessor auditor and reviewing the predecessor's working papers. ... to a new engagement. d. Acceptable if the client and the predecessor auditor agree to it.

Last Answer : Acceptable if the client and the predecessor auditor agree to it.

The criteria for evaluating quantitative information vary. For example, in the audit of historical financial statements by CPA firms, the criteria are usually: a. Generally accepted auditing standards. b. Acceptable financial reporting framework c. Regulations of the Securities and Exchange Commission d. Regulations of the Bureau of Internal Revenue

Description : The criteria for evaluating quantitative information vary. For example, in the audit of historical financial statements by CPA firms, the criteria are usually: a. Generally accepted auditing ... Regulations of the Securities and Exchange Commission d. Regulations of the Bureau of Internal Revenue

Last Answer : Acceptable financial reporting framework

The CPA should not undertake an engagement if his fee is to be based upon a. A percentage of audited net income. b. Per diem rates plus expenses. c. The findings of a tax authority. d. The complexity of the service rendered

Description : The CPA should not undertake an engagement if his fee is to be based upon a. A percentage of audited net income. b. Per diem rates plus expenses. c. The findings of a tax authority. d. The complexity of the service rendered

Last Answer : A percentage of audited net income

Transactions with related parties are important to the auditors because they will be disclosed in the financial statements if material. Generally accepted accounting principles would not require disclosure of a. Loans to officers during the year which had been repaid before the balance sheet date. b. The nature of the related-party relationship. c. A description of transactions, including peso amounts. d. The amounts due from and to related parties

Description : Transactions with related parties are important to the auditors because they will be disclosed in the financial statements if material. Generally accepted accounting principles would not require disclosure of ... transactions, including peso amounts. d. The amounts due from and to related parties

Last Answer : Loans to officers during the year which had been repaid before the balance sheet date

Which of the following is not included in the engagement letter? a. Objectives of the engagement b. Management's responsibilities c. A clear explanation of the services to be performed on the engagement d. Representations that the financial statements were prepared in accordance with generally accepted accounting principles

Description : Which of the following is not included in the engagement letter? a. Objectives of the engagement b. Management's responsibilities c. A clear explanation of the services to ... d. Representations that the financial statements were prepared in accordance with generally accepted accounting principles

Last Answer : Representations that the financial statements were prepared in accordance with generally accepted accounting principles

Whenever a CPA professional is engaged to perform an audit of financial statements according to Philippine Standards on Auditing, he required to comply with those standards in order to a. Eliminate audit risk. b. Eliminate the professional judgment in resolving audit issues. c. Have a measure of the quality of audit performance. d. To reduce the audit program to be prepared by the auditor.

Description : Whenever a CPA professional is engaged to perform an audit of financial statements according to Philippine Standards on Auditing, he required to comply with those standards in order to a. Eliminate audit risk ... of audit performance. d. To reduce the audit program to be prepared by the auditor.

Last Answer : Have a measure of the quality of audit performance.

In an engagement to perform agreed-upon procedures, an auditor is engaged to: a. Use accounting expertise as opposed to auditing expertise to collect, classify, and summarize financial information. b. Provide a moderate level of assurance that the information is free of material misstatement. c. Provide a high, but not absolute, level of assurance that the information is free of material misstatement. d. Carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings

Description : In an engagement to perform agreed-upon procedures, an auditor is engaged to: a. Use accounting expertise as opposed to auditing expertise to collect, classify, and summarize financial information. b ... and the entity and any appropriate third parties have agreed and to report on factual findings

Last Answer : Carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings

This is the standard-setting body that replaces the Accounting Standards Council (ASC) and is tasked to develop and issue standards which will represent generally accepted accounting principles in the Philippines: a. Accounting Standards Board. b. Financial Reporting Standards Committee. c. Financial Reporting Standards Council. d. Auditing and Assurance Standards Council.

Description : This is the standard-setting body that replaces the Accounting Standards Council (ASC) and is tasked to develop and issue standards which will represent generally accepted accounting principles in ... Committee. c. Financial Reporting Standards Council. d. Auditing and Assurance Standards Council.

Last Answer : Financial Reporting Standards Council.

The auditor's judgment concerning the overall fairness of presentation of financial position, results of operation, and changes in cash flow is applied within the framework of a. Generally accepted auditing standards which include the concept of materiality b. Generally accepted accounting principles. c. Philippine Financial Reporting Standards d. Quality control

Description : The auditor's judgment concerning the overall fairness of presentation of financial position, results of operation, and changes in cash flow is applied within the framework of a. ... b. Generally accepted accounting principles. c. Philippine Financial Reporting Standards d. Quality control

Last Answer : Philippine Financial Reporting Standards

No matter competent a CPA may be, his opinion on financial statements will be of little value to those who rely upon him unless he: a. Maintains his independence. b. Maintains professional competence. c. Maintains a program of continuing education. d. Serves his clients with professional concern.

Description : No matter competent a CPA may be, his opinion on financial statements will be of little value to those who rely upon him unless he: a. Maintains his independence. b. Maintains professional competence. c. Maintains a program of continuing education. d. Serves his clients with professional concern.

Last Answer : Maintains his independence

Which of the following mostly describes the function of AASC? a. To monitor full compliance by auditors to PSAs. b. To assist the Board of Accountancy in conducting administrative proceedings on erring CPAs in audit practice. c. To promulgate auditing standards, practices and procedures that shall be generally accepted by the accounting profession in the Philippines. d. To undertake continuing research on both auditing and financial accounting in order to make them responsive to the needs of the public

Description : Which of the following mostly describes the function of AASC? a. To monitor full compliance by auditors to PSAs. b. To assist the Board of Accountancy in conducting administrative proceedings on ... both auditing and financial accounting in order to make them responsive to the needs of the public

Last Answer : To promulgate auditing standards, practices and procedures that shall be generally accepted by the accounting profession in the Philippines.

It involves a study or evaluation of the quality of audit of financial statements through a review of quality control measures established by on CPA firms and individual CPAs in public practice to ensure compliance with accounting and auditing standards and practices a. External audit b. Compliance audit c. Peer review d. Quality review

Description : It involves a study or evaluation of the quality of audit of financial statements through a review of quality control measures established by on CPA firms and individual CPAs in public practice to ... standards and practices a. External audit b. Compliance audit c. Peer review d. Quality review

Last Answer : Quality review

A violation of the ethical standards would most likely have occurred when a CPA a. Made arrangement with a bank to collect notes issued by a client in payment of fees due. b. Joined an accounting firm made up of three non-CPA practitioners. c. Issued an unqualified opinion on the 2006 financial statements when fees for the 2005 audit were unpaid. d. Purchased a bookkeeping firm's practice of monthly write-ups for a percentage of fees received over a three-year period

Description : A violation of the ethical standards would most likely have occurred when a CPA a. Made arrangement with a bank to collect notes issued by a client in payment of fees due. b. Joined an ... bookkeeping firm's practice of monthly write-ups for a percentage of fees received over a three-year period

Last Answer : Issued an unqualified opinion on the 2006 financial statements when fees for the 2005 audit were unpaid

A violation of the ethical standards would most likely have occurred when a CPA a. Made arrangement with a bank to collect notes issued by a client in payment of fees due. b. Joined an accounting firm made up of three non-CPA practitioners. c. Issued an unqualified opinion on the 2010 financial statements when fees for the 2009 audit were unpaid. d. Purchased a bookkeeping firm's practice of monthly write-ups for a percentage of fees received over a three-year period.

Description : A violation of the ethical standards would most likely have occurred when a CPA a. Made arrangement with a bank to collect notes issued by a client in payment of fees due. b. Joined an accounting ... firm's practice of monthly write-ups for a percentage of fees received over a three-year period.

Last Answer : Issued an unqualified opinion on the 2010 financial statements when fees for the 2009 audit were unpaid

Operational audit differs in many ways from an audit of financial statements. Which of the following is the best example of one othese differences? a. The usual audit of the financial statement covers four basic statements, whereas operational audit is usually limited either the statement of financial position or the income statement. b. Operational audit do not necessarily result in the preparation of a report. c. The operational audit deals with pre-tax income. d. The boundaries of an operational audit are often drawn from an organization chart and are not limited to a single accounting period.f

Description : Operational audit differs in many ways from an audit of financial statements. Which of the following is the best example of one of these differences? a. The usual audit of the financial statement ... audit are often drawn from an organization chart and are not limited to a single accounting period.

Last Answer : The boundaries of an operational audit are often drawn from an organization chart and are not limited to a single accounting period.

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

Which of the following acts of the CPA would be most likely a violation of the Code of Ethics? a. Assisting a client in preparing a financial forecast. b. Acting as auditor of a non-charitable organization with audit client serving as president. c. Accepting a fee in a tax matter that is contingent upon the result of an administrative proceeding. d. Having an immaterial loan to the president of an audit

Description : Which of the following acts of the CPA would be most likely a violation of the Code of Ethics? a. Assisting a client in preparing a financial forecast. b. Acting as auditor of a non- ... upon the result of an administrative proceeding. d. Having an immaterial loan to the president of an audit

Last Answer : Having an immaterial loan to the president of an audit

When a CPA who is not independent is associated with financial statements, he would be precluded from expressing an opinion becausea. The public would be aware of his lack ofindependence and would place little orno faith in his opinion.b. He would place himself in the position ofsuffering an adverse decision in apossible liability suit.c. He would be in the position of auditinghis own work.d. Any auditing procedures he mightperform would not be in accordancewith generally accepted auditingstandards

Description : When a CPA who is not independent is associated with financial statements, he would be precluded from expressing an opinion becausea. The public would be aware of his lack of ... Any auditing procedures he might perform would not be in accordance with generally accepted auditing standards

Last Answer : Any auditing procedures he might perform would not be in accordance with generally accepted auditing standards

The Code of Ethics would be violated if a CPA accepted a fee for services and the fee was: a. Fixed by a public authority. b. Based on a price quotation submitted in competitive bidding. c. Based on the results of judicial proceedings in a tax matter. d. Payable after a specified finding was attained in a review of financial statements

Description : The Code of Ethics would be violated if a CPA accepted a fee for services and the fee was: a. Fixed by a public authority. b. Based on a price quotation submitted in competitive bidding. c. ... in a tax matter. d. Payable after a specified finding was attained in a review of financial statements

Last Answer : Payable after a specified finding was attained in a review of financial statements

Which of the following statements does not properly describe an element of the theoretical framework of auditing? a. An audit benefits the public. b. The data to be audited can be verified. c. Auditors act on behalf of management. d. Short-term conflicts may exist between managers who prepare data and auditors who examine the data

Description : Which of the following statements does not properly describe an element of the theoretical framework of auditing? a. An audit benefits the public. b. The data to be audited can be verified. c. ... . d. Short-term conflicts may exist between managers who prepare data and auditors who examine the data

Last Answer : Auditors act on behalf of management

A successor auditor most likely would make specific inquiries of the predecessor auditor regarding a. Specialized accounting principles of the client's industry. b. Disagreements with management as to auditing procedures. c. The competency of the client's internal audit staff. d. The uncertainty inherent in applying sampling procedures.

Description : A successor auditor most likely would make specific inquiries of the predecessor auditor regarding a. Specialized accounting principles of the client's industry. b. Disagreements with management as to ... the client's internal audit staff. d. The uncertainty inherent in applying sampling procedures.

Last Answer : Disagreements with management as to auditing procedures

Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding a. Disagreements the predecessor had with the client concerning auditing procedures and accounting principles. b. The predecessor’s evaluation of matters of continuing accounting significance. c. The degree of cooperation the predecessor received concerning the inquiry of the client’s lawyer. d. The predecessor’s assessments of inherent risk and judgments about materiality

Description : Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding a. Disagreements the predecessor had with the client concerning auditing ... lawyer. d. The predecessor's assessments of inherent risk and judgments about materiality

Last Answer : Disagreements the predecessor had with the client concerning auditing procedures and accounting principles.

Generally Accepted Auditing Standards (GAAS) and Philippine Standards on Auditing (PSA) should be looked upon by practitioners as a. Ideals to work towards, but which are not achievable. b. Benchmarks to be used on all audits, reviews, and compilations. c. Maximum standards which denote excellent work. d. Minimum standards of performance which must be achieved on each audit engagement.

Description : Generally Accepted Auditing Standards (GAAS) and Philippine Standards on Auditing (PSA) should be looked upon by practitioners as a. Ideals to work towards, but which are not achievable. b. ... excellent work. d. Minimum standards of performance which must be achieved on each audit engagement.

Last Answer : Minimum standards of performance which must be achieved on each audit engagement.

Which of the following is an indication of lack of objectivity of an auditor? a. The auditor believes that accounts receivable may not be collectible, but accepts management's opinion without an independent evaluation. b. In preparing client's tax return, the CPA encourages client to take a deduction which the CPA believes is valid, but for which there is some but not complete support. c. Both a and b above would be a violation d. Neither would be a violation

Description : Which of the following is an indication of lack of objectivity of an auditor? a. The auditor believes that accounts receivable may not be collectible, but accepts management's opinion without an independent evaluation. ... . c. Both a and b above would be a violation d. Neither would be a violation

Last Answer : The auditor believes that accounts receivable may not be collectible, but accepts management's opinion without an independent evaluation.